Experts from the SunShot Initiative outlined for reporters yesterday the state of the U.S. solar industry and the progress it has made toward the goal of making solar energy cost-competitive with other forms of electricity by 2020.
The call coincided with the release of the On the Path to SunShot reports, a series of eight research papers drawing expertise from four national labs. The reports detail issues such as emerging opportunities and challenges in solar finance, manufacturing and grid integration, among other subjects.
The reports explore lessons learned during the five-year history of the initiative. The solar industry is currently about 70% of the way towards achieving the Initiative’s 2020 goals. Since 2011, solar has become more affordable, helping the industry grow an astonishing 23-fold since the beginning of the Obama Administration.
Yet new challenges and opportunities have emerged. The reports explore the lessons learned in the first five years of the initiative and identifies key research, development and market opportunities.
The papers are available here:
- Emerging Issues and Challenges with Integrating High Levels of Solar into the Electrical Generation and Transmission Systems
- Emerging Issues and Challenges with Integrating High Levels of Solar into the Distribution System
- The Role of Advancements in Photovoltaic Efficiency, Reliability and Costs
- Advancing Conventrating Solar Power Technology, Performance and Dispatchability
- Emerging Opportunities and Challenges in U.S. Solar Manufacturing
- Emerging Opportunities and Challenges in Financing
- Utility Regulations and Business Model Reforms for Address the Financial Impact of Distributed Solar on Utilities
- The Environmental and Public Health Benefits of Achieving High Penetration of Solar Energy in the United States
- Executive Summary
Lidija Sekaric, director of the SunShot Initiative, and Robert Margolis, editor of the On the Path to SunShot study series, discussed several issues impacting the solar industry, including technology, manufacturing and financing innovation, on the call yesterday.
These charts, supplied by the Department of Energy, show the falling costs of solar PV between 2010 and 2015, as well as where costs need to be to meet 2020 SunShot goals.
Technology
The U.S. Department of Energy launched the SunShot Initiative in 2011. Making solar electricity cost-competitive with conventional sources of electricity by 2020 required reducing photovoltaic (PV) and concentrating solar power (CSP) prices by approximately 75%, relative to 2010 prices, across the residential, commercial and utility-scale sectors.
The On the Path of Sunshot study series evaluates progress toward that goal and affirms the solar industry must sustain innovation across all sectors to reach the 2020 goals. Sekaric identified three key insights from the reports:
- Increasing the use of grid flexibility options from advance power electronics to integration with storage can enable grid penetration of solar to reach 25% without major intervention.
- The industry will need continued innovation in hardware science and technology. “Innovation will enable us to go passed those goals, driving down the cost of solar, even below targets set for 2020,” she said.
- As the industry drives down the cost of solar beyond 2020 targets, development of integrated solar systems will open up, presenting a much higher value of solar and increasing deployments.
Since 2010, prices have been reduced 40% to 50% across different sectors.
“The decrease has been tremendous and has enabled tremendous amounts of deployment to date, however further reductions need to happen for 2020 targets and will require further innovation both in performance of systems as well as how we finance and permit these systems, for example,” Sekaric said.
While PV’s greater modularity and lower LCOE have made it attractive to solar developers—so much so that some large plans were changed from CSP to PV—CSP with storage could add flexibility value to the highly variable nature of solar PV and wind power systems, providing continuous power. The SunShot program also retains a commitment to concentrated solar power, the speakers said.
“Because CSP with storage can store energy when net demand is low and release that energy when demand is high, it increases the electricity systems ability to balance supply and demand over multiple time scales,” said Margolis, the editor of the reports. “Such flexibility becomes increasingly important as more variable generation energy is added to the system.”
Of course, CSP systems are more complex to design, develop, construct and operate, and they require a much larger minimum effective scale—typically at least 50 MW.
Financing
For the past several years, non-hardware discussions at SunShot have focused on the challenge of solar financing—regarding both its cost and ease of access. Financial innovation and reduction in capital cost alone—independent of technology improvements—could cut PV’s LCOE by 30% to 60%, Sekaric said.
“We envision a day when both financing and purchasing a photovoltaic system for one’s home could be as easy as purchasing a refrigerator,” she said.
Margolis noted that costly and inefficient tax-equity financing is giving way to alternatives such as securitization of solar project portfolios, solar-specific loan products, online finance platforms and methods for incorporating residential PV’s value into home values.
“To move solar further toward an unsubsidized SunShot future, additional financial innovation must occur,” Margolis said. “Development of a larger, more mature solar industry will likely increase financial transparency and investor confidence, which in turn will enable simpler, lower-cost financing methods.”
He said utility scale solar could be financed more like convention generation assets are today. Non-residential solar may be financed more like a new roof. And residential solar may be financed like an expensive appliance.
Manufacturing
Strong projected demand for solar across the U.S. and the Americas could increase attractiveness of U.S. manufacturing. Sekaric noted that driving down costs will help retain growth for domestic manufacturers, especially if they can unlock new, major innovations in panel technology.
While improvements in PV panels have created steep cost reductions over the last five years, returns on incremental improvements seem to be diminishing, Margolis noted.
“More dramatic innovations in module design and manufacturing are required to continue along the path of rapid progress,” he said.
Margolis said major opportunities exist for the innovation of CSP technologies. This need could benefit U.S.-based PV and CSP manufacturers, he said.
“Because 2020 really is around the corner for us, we are looking forward to defining what kind of targets and goals we’ll be setting for the 2030 time horizon,” Sekaric concluded. “This series of papers will help us set those goals and, we hope, help the entire industry tackle some of those challenges that aren’t just near-time but long-term, as well.”